“In addition, and due to FedEx Freight's recent debt issuance, we also anticipate a headwind in the quarter due to the resulting higher interest costs.”

In context

“mplies Q4 adjusted EPS of approximately $5.80, which would be our highest quarterly earnings of the year and is directionally consistent with typical trends. However, due to the strength of our peak profitability in Q3, we do not expect as large of a sequential increase in third to fourth quarter earnings as we've seen in recent years. Additionally, the onetime tax benefit in this year's Q3 and freight's $33 million gain on sale of the facility in last year's Q4 skews sequential comparisons. I'll also note that our revised outlook does not include any incremental share repurchases in Q4. As a result, we expect an EPS headwind from share dilution based on a Q4 common share equivalent assumption of approximately 242 million shares, bringing our FY '26 expected average to 239 million shares. In addition, and due to FedEx Freight's recent debt issuance, we also anticipate a headwind in the quarter due to the resulting higher interest costs. And in total, this combined impact from higher share count and interest cost represents an approximate $0.10 sequential and year-over-year headwind that we've embedded in our Q4 outlook. In Q4, we'll continue to strategically prioritize high-value revenue growth while continuing to reduce our structural costs, all while advancing our other strategic priorities such as Tricolor and Network 2.0, and this will support our expectation for sequential growth in adjusted operating income in Q4. At FEC, we anticipate both sequential and year-over-year growth in adjusted operating income despite year-over-year headwinds from higher variable incentive compensation, global trade policy changes, lapping the onboarding of several high-margin health care customers and continued MD-11 impacts. We also e”